A corporate bond has a coupon rate of 9%,a face value of $1,000,and matures in 15 years.Which of the following statements is most correct?

Question

Quizplus · Accepted Answer

If an investor buys the bond for less than its face value (in this case, $900), the yield to maturity will be greater than the coupon rate (9%). Therefore, choice C is correct. Choice A is incorrect because if the required return is less than the coupon rate, the bond will be valued at less than the face value. Choice B is incorrect because if the investor holds the bond until maturity, the capital loss or gain will depend on the market interest rate at that time. Choice D is incorrect because the annual interest payments on the bond will be $90 (9% of $1,000), not $81.

A Corporate Bond Has a Coupon Rate of 9%,a Face